Electronic Arts drops buyout bid for rival
The Associated Press
Published Sunday, September 14, 2008 9:33PM EDT
NEW YORK - Video game publisher Electronic Arts Inc. said Sunday it ended talks to buy smaller rival Take-Two Interactive Software Inc., best known for the "Grand Theft Auto" series of games.
EA, the publisher of games such as "Madden NFL 09" and "Spore," said it decided not to make an offer to buy Take-Two.
Redwood City, Calif.-based EA had signed a non-disclosure agreement with Take-Two in August after letting a deadline for a $2-billion tender offer to buy the company expire.
"EA is tracking toward a record-breaking year," said president and chief executive John Riccitiello, in a statement.
Spokesman Jeff Brown said Sunday EA is "not at all" disappointed that things didn't work out.
Brown did not say what prompted EA to walk away from the discussions but he added the company is confident in its own product portfolio. Take-Two, he added, was "never something EA needed."
Since making its offer public in February, EA has maintained it was offering a "fair and full" price for New York City-based Take-Two. And while keeping the total price of the bid at $2 billion, it lowered the original $26-a-share offer to $25.74 to account for restricted shares granted to Take-Two's management.
Take-Two, meanwhile, said the offer undervalued the company and repeatedly rejected it.
While many analysts expected EA to eventually raise its offer by a dollar or two, recently Take-Two shareholders seemed less optimistic. On Friday, the company's shares were trading at their lowest since Feb. 22, the last trading day before EA made its offer public and sent Take-Two's shares shooting up 55 per cent.
Take-Two chairman Strauss Zelnick said Sunday the company remains focused in creating value for its shareholders and customers and has been since EA first launched its hostile bid six months ago.
Now, he added in a statement, the company remains "actively engaged in discussions with other parties in the context of our formal process to consider strategic alternatives."
A Take-Two spokesman said Sunday the company is not disclosing more information on those talks.
EA said it still has a "high regard" for Take-Two's creative teams and products. But, after a "careful consideration," including presentations by Take-Two's management and a review of due diligence materials, it decided not to make an offer.
"At the end of the day, we simply have different views on the value of the company," Brown said.